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Quality Choice in a Vertically Differentiated Mixed Duopoly

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  • F. Delbono
  • V. Denicolò
  • C. Scarpa

Abstract

We model a duopoly with a private and a public firm under the hypothesis of vertical product differentiation. Firms choose their quality levels first and then prices. We ask which firm will choose to serve the higher (lower) segment of the market. When firms act simultaneously in each stage, there are two subgame perfect Nash equilibria entailing opposite rankings between the quality levels. If the State-owned firm has a move advantage, then there is a unique Stackelberg equilibrium in which the public firm serves the upper segment of the market.

Suggested Citation

  • F. Delbono & V. Denicolò & C. Scarpa, 1991. "Quality Choice in a Vertically Differentiated Mixed Duopoly," Working Papers 108, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:108
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    Cited by:

    1. Koji Ishibashi & Toyokazu Kaneko, 2008. "Partial privatization in mixed duopoly with price and quality competition," Journal of Economics, Springer, vol. 95(3), pages 213-231, December.
    2. Jofre-Bonet, Mireia, 2000. "Health care: private and/or public provision," European Journal of Political Economy, Elsevier, vol. 16(3), pages 469-489, September.
    3. Manna, Ester, 2013. "Mixed Duopoly with Motivated Teachers," MPRA Paper 52041, University Library of Munich, Germany.
    4. Lin Liu & Yuanzhu Lu, 2014. "Endogenous Timing In A Mixed Duopoly With Endogenous Vertical Differentiation," Bulletin of Economic Research, Wiley Blackwell, vol. 66(3), pages 305-312, July.
    5. Chen, Yi-Wen & Yang, Ya-Po & Wang, Leonard F.S. & Wu, Shih-Jye, 2014. "Technology licensing in mixed oligopoly," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 193-204.

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